Ex-WG compliance chief pleads guilty in fraud

Published 2:34 am, Tuesday, September 1, 2009

Deborah Duffy, former chief compliance officer of Greenwich-based WG Trading Co., pleaded guilty to federal charges in what prosecutors called a nearly $554 million fraud.

Duffy, 53, of Mahwah, N.J, entered the plea in Manhattan federal court. She faces a separate suit by the Securities and Exchange Commission. She agreed to cooperate with federal prosecutors as part of a larger probe.

The victims of the fraud were large institutional investors, including several public pension funds and educational institutions and endowments, the SEC said in its civil complaint.

Paul Greenwood and Steven Walsh, general partners of WG Trading, were charged in February with using WG Trading Investors and related companies as a personal piggy bank to buy homes, cars, horses and collectible teddy bears. The SEC, which also sued the men, described WG Trading Investors as an unregistered investment vehicle.

Greenwood lives in North Salem, N.Y., and Walsh in Sands Points, N.Y. They face as much as 20 years in prison on securities fraud and other charges and are free on $7 million bond. They have yet to enter a plea to the charges.

In her guilty plea to money laundering, securities fraud and conspiracy, Duffy said she authorized transfers to others at the firm of more than $100 million. At first, she said, she believed the transfers were loans that would be repaid.

"After a period of time, I realized that the money was not being returned," Duffy told U.S. District Judge Naomi Buchwald.

Duffy, who worked as a compliance officer at the firm from 1991 until this year, agreed to forfeit her ill-gotten gains.